9911796707
TMI Blog1948 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... e or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually. 4. (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which (a) are received or are deemed to be received in British India in such year by or on behalf of such person, or (b) if such person is resident in British India during such year, (i) accrue or arise or are deemed to accrue or arise to him in British India during such year, or (ii) accrue or arise to him without British India during such year, or . . . . . . . . . . 4A. For the purposes of this Act (c) a company is resident in British India in any year (a) if the control and management of its affairs is situated wholly in British India in that year, or (b) if its income arising in British India in that year exceeds its income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions in favour of the respondent. In the appeal before their Lordships the appellant company did not challenge the answer to the third question. Their Lordships will deal first with the subject-matter raised by the first two questions. The sub-sections referred to in the second question contain only definitions of " total income " and " residence of a company. " By themselves these definitions do nothing. Taken in isolation they raise no question of vires. But the use of the defined terms in the charging section of the Act (Section 3) may result in ultra vires legislation. The question at issue here is but one question only, namely, the effectiveness in law of the charging section in its application to companies which satisfy the test set forth in the definition of residence, as respects their total income computed as including income arising without British India. The general nature of the charging section is clear. First, the charge for tax at the rate fixed for the year of assessment is a charge in respect of the income of the " previous year, " not a charge in respect of the income of the year of assessment as measured by the income of the previous year. That has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the powers possessed by a subordinate legislature depends upon the proper construction of the statute conferring those powers. No doubt the enabling statute has to be read against the background that only a defined territory has been committed to the charge of the legislature. Concern by a subordinate legislature with affairs or persons outside its own territory may, therefore, suggest a query whether the legislature is in truth minding its own business. It does not compel the conclusion that it is not. The enabling statute has to be fairly construed. The relevant power [Section 99(1) and Section 100 of the Government of India Act, 1935] is a power to make laws for the whole or part of British India or any Federated State with respect to " taxes on income other than agricultural income. " The power to tax agricultural income is given to the Provincial Legislatures and the exception throws no light on the construction of the phrase " taxes on income. " None of the other provisions of the Act affords any guidance as to the income or persons who may be subjected to tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable in the hands of a " resident " does not mark any matter of principle which can be considered as imported into the phrase " taxes on income. " In their Lordships ' opinionthey confine their attention to companies-the necessity that the territorial connection should be residence as understood for the purpose of the British Income Tax Acts, is not embedded in the terms of the power. It is artificial in any event to attribute residence to a company. No less artificial is the selection as a matter of judicial construction of the British Income Tax Acts of the place at which central control is exercised as the residence of a company. The principlesufficient territorial connection-not the rule giving effect to that principle-residence-is implicit in the power conferred by the Government of India Act, 1935. The result is that the validity of the legislation in question depends on the sufficiency for the purpose for which it is used of the territorial connection set forth in the impugned portion of the statutory test. Their Lordships propose to confine themselves to that short point and do not propose to lay down any general formula defining what territorial connection is necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
